Kenya's stock exchange plans East Africa's first AI-focused ETF

By Duncan Miriri

NAIROBI, Aug 5 (Reuters) - Kenya's Nairobi Securities Exchange is creating East Africa's archetypal AI stocks-focused exchange-traded fund, which it plans to connection to investors earlier year-end, its CEO said.

The Nairobi marketplace attracts a sizeable ‌proportion of overseas equity investors fixed its profitable banking assemblage and telecoms relation Safaricom, but it does not presently ‌offer vulnerability to AI stocks.

"We privation fundamentally to beryllium capable to bring a merchandise to our marketplace wherever the underlying handbasket is simply a reflection of companies that ​have a nonstop vulnerability to AI," Frank Mwiti told Reuters.

Companies similar Microsoft, Anthropic and OpenAI could beryllium utilized arsenic references for the ETF, helium added.

Kenyan investors tin already entree AI-related products abroad, but the NSE wants to marque it easier for them to commercialized locally, Mwiti said, adding determination was request for an AI merchandise particularly from new, younger investors.

"Instead of cement manufacturing... they privation to bash AI," ‌he said.

EXCHANGE ALERT TO RISK OF BUBBLE, CEO ⁠SAYS

The AI roar this twelvemonth has driven banal markets to grounds highs, but the surge has stoked concerns astir a bubble that could resistance satellite stocks down sharply if it pops.

The Nairobi bourse volition ⁠study the planetary AI rally cautiously and hold the ETF motorboat if request beryllium to guarantee investors are not exposed to an overdone move, Mwiti said.

"There is... a vibe successful the marketplace that determination mightiness beryllium a bubble astir AI, truthful possibly determination is besides an facet ​of ​waiting and seeing," helium said.

ETFs are funds with underlying assets similar listed ​shares, which commercialized connected exchanges similar mean equities, offering ‌investors vulnerability to a peculiar plus class.

The planned AI money volition astir apt beryllium denominated successful the Kenyan shilling, Mwiti said, to bounds overseas speech risks.

"Kenyans are really investing successful overseas markets due to the fact that of deficiency of merchandise diverseness here," helium said.

The speech is discussing the connection with the marketplace regulator, Mwiti said.

It is besides considering a cryptocurrency ETF based connected Bitcoin, Ethereum and Solana, which could beryllium launched adjacent twelvemonth aft the transition of a instrumentality governing virtual assets successful Kenya, helium said.

AI ETFS WIDELY AVAILABLE IN ‌ADVANCED MARKETS

Many African superior markets bash not yet person AI ETFs, which are ​available successful large developed markets specified arsenic the United States.

Demand for specified ​a merchandise successful Kenya is not conscionable owed to booming ​demand for shares successful the likes of SK Hynix oregon Samsung, but besides to the country's progressively ‌investment-savvy young population, Mwiti said.